ESG rating is an objective, independent and unbiased opinion on a company’s ability to mitigate future/emerging risks associated with Environment, Social, and Governance issues that can have a material financial impact on the company’s financials. ESG rating identifies a company’s exposure to relevant industry specific ESG risks and benchmarks the company’s management of the risks to that of peers in the industry (laggards and leaders). An ESG rating can be considered a performance indicator illustrating companies’ long- term sustainability, growth potential and future performance in an ever changing market. The ESG rating allows the investors/lenders to take more informed decisions.
Once a company has been rated, we continuously review and update the company’s ESG scores and rating. ESG RISK AI discontinues the rating in case of specific corporate events like merger, acquisition or dissolution, de-listing. Subscribers are informed about such discontinuation.
How does ESG RISK AI’s subscription model work and what are the benefits of a subscription model? How does ESG RISK AI ensure the ratings are unbiased?
ESG RISK AI has adopted a ‘subscriber-pays’ model allowing regulators, investors, companies and universities to get access to our ESG rating reports. The extensive use of technology allows a by and large automated analysis of the publicly available data and rating, which is overseen by our analysts. To ensure objectivity, the analysts’ compensation is not linked to rating outcome, neither are analysts allowed to rate companies where a conflict of interest is present. Moreover, before a company’s rating is published, the rating is shared for feedback with the company and stakeholders. A careful adoption of business model, internal firewalls, compensations and other policies, transparent disclosure of methodology and taxonomy, and allowing companies to review data used for assessments and provide their feedback on data, ensures that the ratings are unbiased.
No, ESG rating is not a recommendation to buy, sell or hold any security, financial instruments.
Investors worldwide are investing in businesses that are more responsible. They are also looking for models that will be able to predict failures due to issues such as climate risk, social inequality and ethics in business. ESG assessments are widely accepted as a tool that helps users to evaluate company’s and industry’s performance on ESG issues.
ESG RISK AI believes a large number of stakeholders are interested in identifying responsible and sustainable businesses (leaders and laggards) across industries. ESG rating has been accepted by the investor community as a very effective tool to identify companies aligned with their investment interests. Regulators, financial institutions, think tanks, etc. want to better understand and monitor companies and industries’ ESG performance and impact on sustainable development. Companies want to compare their performance with competitors. Across the world; environmental, social and governance related compliances are increasingly regulating the business sector and many countries have started mandatory reporting of ESG aspects. Subscribers are looking for a reliable and comprehensive assessments that provides a unbiased and predictive models, which helps them identify companies exposure and performance related to climate risk, social inequality and ethics in business. ESG RISK AI provides subscribers the opportunity to access all companies that we have rated, a continuously growing database.
ESG RISK AI uses the National Industry Classification (NIC code).
Effective April 2021, ESG RISK AI will cover 500 (by market capitalisation) listed Indian companies. In case our clients request coverage of specific companies, we will consider these requests on a case to case basis.